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Hey Used Video Game Sellers: The XBOX One Just Pooped In Your Sandbox

Hi gang,


Happy early summer to you wherever you are.  Here in Charlotte, we celebrate 5 seasons: Summer, Fall, Winter, Spring, and Pollen.  I am very happy that Pollen season is over because it was a bad one this year.  This is no lie – there has been more pollen on my car and back deck than snow for 2 years straight. My car looked ridiculous –  it was like a bucket of Peeps had exploded all over my windshield.  So I would get in my car and turn on the wipers and that didn’t clear it off, so I would hit it with wiper fluid and now there was this wet yellow mess all over my car. Fortunately, after I drove somewhere for a very important meeting in my Sunday best and opened the door to get out, most of the time wet yellow glop splattered down onto my shirt and pants so when I walked into the meeting I looked like I just finished making out with Big Bird. May as well stay home and play video games.

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Speaking of video games, Microsoft has finally announced the arrival of its’ newest gaming system, the XBOX One. They’ve made a ton of hardware upgrades to it, have added a more sophisticated kinect system, and designed new controllers. It looks like it’s going to be pretty sweet (that’s a term I use with the kids these days so I still seem cool).



In fact, the XBOX One is so different that no current Xbox system games or peripherals will be compatible with it. Yep, the 360 and Kinect games you have will not work on the One.  Neither will your controller.  See what XBOX did there? They just pulled an “Apple iPhone 5 needs an adapter to charge on current Apple peripherals and so Apple sells 15 million adapters for $15 each” new revenue stream on you.  Luckily for you, Microsoft plans to support the 360 and Kinect for a while and even introduce new games on them.  But still – C’MON, MAN!!


Heres’ the fun part if you resell used video games. I’m talking to the small sellers, large retailers, and specialty shops like Gamestop here that share in the $4 billion in annual used game sales: Microsoft wants a big piece of that market.


You see, Microsoft and the other publishers and game makers don’t see a dime of secondhand sales of their products.  Personally, I would be just fine making a gazillion dollars a year creating and distributing games, but we’re talking about large publicly traded corporations and they do one thing – make money.  So Microsoft has figured out how to poop in your sandbox.


How?


Wellll, Microsoft is being a little shifty about this at the moment. We are all hoping that they are going to clear the air about The Plan in the next few weeks at E3, the giant annual video game conference that I have attended several times. It looks like it’s going to work like so:


1.  You’ll buy the game from a retailer. When you install it on the XBOX One, it will copy the game to the hard drive of the One and lock it in to the gamer profile of the person who installed it. It must be activated.  This will make the disc itself useless and unnecessary.  The only person who can play the game is the gamer it belongs to.  No more lending or borrowing games to others.


2.  It gets unclear after that, but retailers are being told that customers can still trade in games, but now they must unregister the game from Microsoft (which wipes it off the original owner’s hard drive) and then pay a hefty fee to Microsoft to reactivate it again. The rumor is that the fee is large enough that the retailer will have to resell used games for north of $50.00 to make any profit at all.


So the overall implications are that a) used game prices are going to go up – way up  b) buying and reselling XBOX One is going to be a giant, expensive pain in the rump, and c) looks like all those people not paying for games are going to have to pay to play – this will do a number on piracy.


I sold DVD’s, CD’s, and Video Games for almost 10 years.  That entire time I knew that the physical media was going to wither and die. I watched it happen firsthand with CD’s.  Let’s all be logical here – what is the point of making a physical disc, and putting that disc in a case, and then in a box with a manual, and then putting it on a truck and displayed in a store for you to buy when you can just download it? We are perfecting the delivery vehicles – iTunes, Xbox, Netflix, Amazon, cable – The need for physical items is literally ZERO now.  So if you didn’t see this giant iceberg coming then I don’t know what to tell you, brother.


It’s not the end of used video game selling, but it is absolutely the beginning of the end.  As I used to joke with my fellow large DVD seller friends, “Why oh why didn’t we just buy a Dunkin Donuts franchise?”

Best,

Kevin Harmon

kevin@redshortsmedia.com

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About the Author: Kevin Harmon

Kevin Harmon is a freelance e-commerce business consultant and blogger. He is the former CEO of Inflatable Madness, LLC, one of the largest DVD and CD sellers on eBay and Amazon, and Red Shorts Media, LLC, which operated multiple e-commerce media buyback websites.

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